Register the IP you’ll use in the US, most likely your trademarks. Many Irish and Northern Irish companies mistakenly believe that their home jurisdiction trademark registrations will be effective in the US. Nope. Also, some will think that the Madrid Protocol causes their home jurisdiction approvals to be effective in the US. Nope. The Madrid Protocol is useful in determining applicant priority, but doesn’t operate to extend a home jurisdiction registration.

I always encourage Irish and Northern Irish companies to inventory their IP that they intend to use in the US before they expand to the US. Part of that effort is to ensure that we’ve properly protected what needs to be protected, and part of it is to ensure that, to the extent needed, any intercompany agreements have the proper scope.

Logos, trade names, product names, etc., can be trademarked here. The US is not a first-to-file trademark registration jurisdiction (where the first to file may prevail even if they are not the first to use–China is, for example, a first-to-file jurisdiction). And, yes, the US does allow for common law trademarks that arise from usage. But the most effective way to protect the value of those marks–the value built in Ireland and Northern Ireland and leveraged in the US–is to register. A basic trademark registration can cost less than $2,500 (with no opposition or other weird developments), and that’s a small price to pay.

The reason I suggest that this is the second thing to do is timing–the USPTO takes a little while to review applications, and may have questions. This isn’t to suggest that you wait on US expansion until after you obtain appropriate registration–you shouldn’t–but you should have your registrations in motion (submitted) when you hit the US market.

The good news is that we’re going to re-start our webinar series on US legal topics for Irish and Northern Irish businesses expanding to/operating in the US. But we need your help: we’re looking for feedback on the topics that might be of interest to an audience of Irish/Northern Irish businesses, their advisors, and other interested parties. The survey is at http://agglaw.polldaddy.com/s/irelandnisurvey

Please take a moment to give us some feedback, and please feel free to forward along to your colleagues and contacts. Thank you in advance for your help.

Ten days ago I was in Belfast, speaking on a joint Invest Northern Ireland- Catalyst program about doing business in the US. Much virtual ink has been spilled on this blog about when an Irish or Northern Irish company should form an affiliate in the US, and the reasons why. At the Belfast program, a participant asked me when an Irish or Northern Irish company might not need to form an affiliate in the US. Specifically, I was asked whether having/using a ‘hot desk’ in the US would require the Irish or Northern Irish company to form a US affiliate. The short answer is ‘no.’

Of course, there is a bit more explanation needed (I’m a lawyer after all…). First, the answer to the question of whether one needs to form an affiliate in the US depends in part on whether the parent company can be deemed or determined to be doing business in one of the US states. That analysis can vary from state to state, and each US state has its own rules. But, in general, the use of a ‘hot desk’ on a periodic basis should not cause an Irish or NI company to be deemed to be doing business in most states. The second point is that the ‘doing business’ determination can and will change the more things an Irish or Northern Irish company does with that ‘hot desk.’ The more activity–making sales, servicing customers, executing contracts, hiring employees or contractors–and the greater the likelihood that the parent company would be deemed to be doing business in that state, and that’s when I recommend the formation of a US affiliate. In other words, the more you do with a ‘hot desk’ and the more commercial contacts you have, the greater the likelihood that you’d be deemed to be doing business in a US state (or more than one) and should consider forming an affiliate.

Let’s assume that the Irish/Northern Irish company will form a Delaware corporation (which is what I’d recommend in many cases). For a proper/complete formation, the Irish/NI company would need to draft (i) articles of incorporation (to be filed with the Delaware Secretary of State’s Corporations Division); (ii) bylaws; (iii) an initial action/consent of the incorporator; (iv) initial consent of the Board of Directors; and (v) SS-4/application for an employer identification number (to be completed and filed with the IRS). The filing with Delaware requires payment of a filing fee—and a filer can pay more for expedited service and other items; also, since the Irish/NI company is, well, in Ireland/NI, they will have to engage a registered agent (the registered agent serves as a point of contact between the company and the State of Delaware). And, filing can be made directly by the Irish/NI company—no real need to incur third-party filing or convenience fees. Continue reading →

Previously, I’ve written how forming a U.S. affiliate can be like using a lightning rod for U.S. litigation risk. Properly used, a U.S. affiliate can help keep U.S. litigation risk away from the Irish/NI parent and its investors. Forming a U.S. affiliate is not enough, and the lightning rod is useless if the U.S. affiliate is considered to be an ‘alter ego’ of the Irish/NI parent.

The corporation (and limited liability company) form in the U.S. generally shields an entity’s investors from the entity’s liabilities; investors would stand to lose their investment, and nothing more, if the entity collapses. There are some limited circumstances where an American court can ‘pierce the veil’ of this liability shield, and impose entity liabilities on an investor—one of those circumstances is when the entity in question is an ‘alter ego’ of one if its investors. In other words, if a U.S. affiliate were deemed to be an ‘alter ego’ of its Irish or Northern Irish parent, the parent and its investors could be responsible for the U.S. affiliate’s liabilities.

When determining whether a subsidiary is an alter-ego of its parent, U.S. courts consider many factors, including whether the:

Irish and Northern Irish parent companies can minimize the risk of having their U.S. affiliate being deemed to be an ‘alter ego’ of the parent by:

Properly capitalizing and insuring the subsidiary. U.S. courts are less likely to extend jurisdiction over foreign parent if the plaintiff can collect the full amount of a judgment against a properly capitalized U.S. corporation;

Complying with corporate formalities;

Creating the subsidiary’s own bank account;

Documenting rationale for the subsidiary’s capital structure;

Documenting inter-company loans;

Maintaining appropriate debt/equity balance;

Having the subsidiary hire and pay for its own employees; and

Creating the subsidiary’s own board of directors.

None of this is bullet-proof, of course, but the above steps should help the U.S. affiliate act like the lightning rod as intended.

As I’ve posted before, I usually advise non-US companies to form a corporation when expanding to the United States. Every now and then, I get some pushback because the non-US company has heard about ‘limited liability companies’ (LLCs) in the US and wants to take advantage of the pass-through tax advantages of the LLC form. Before diving too deeply on this, let me get some definitional items out of the way. Corporate law in the US is predominately a creation of, and within the control of, the states. That’s why you hear about a ‘Delaware corporation’ or a ‘New York corporation’ and not a ‘United States corporation.’ That’s our Federal system at work (when it works). The corporation form in the US is similar to the limited company forms in Ireland and Northern Ireland, in that the shareholders/investors in each are only liable for the entity’s debts to the extent of their investment. Continue reading →

On Friday, I used the phrase “Uber Settlement” as (maybe) click-bait to introduce an important, but hidden, issue facing Irish and Northern Irish companies operating in the US. As I noted in that post, many Irish and Northern Irish companies use a variety of ‘independent contractors,’ especially in the early stages of operating here—consultants and the like who are not intended to be employees. The risks associated with just labeling someone as an independent contractor can be significant, and very expensive. I’ve seen many Irish and Northern Irish companies make the same mistake—assuming that because the relevant contract states that someone is an independent contractor, such person is, in fact, an independent contractor and not an employee. Based on my experience, Irish and Northern Irish companies: Continue reading →

Contact Mike

Follow me on Twitter

About Mike

Michael Burke is a partner in the Corporate Practice of Arnall Golden Gregory, LLP, in the Washington, DC office. He provides creative, effective, efficient, and 'business-sensible' legal advice so companies of all sizes, including emerging growth companies, can turn legal challenges into business opportunities. He has a specific focus on advising Irish and Northern Irish companies on doing business in the United States.

He is a past chair of the 23,000-member American Bar Association Section of International Law, and was the youngest person elected chair of that Section. Mr. Burke has an AV Preeminent™ Rating from Martindale-Hubbell; was named to Washington DC Super Lawyers by Thomson Reuters; was awarded the Business & Finance Magazine Global 100 Irish Business Leaders 2014; and was named to the Irish Legal 100 in 2012 and 2013.

His father's family is from Cahir, Tipperary, and his mother's family is from Castlerea, Roscommon.